One Chart to Rule Them All

Via Kevin Drum, the BBC has a feature in which some of the worlds “top economists” show their “most telling” charts regarding the financial developments of the last year.

Conspicuously absent is this chart:

[Courtesy of Marcus Nunes]

Europe is facing what is fundamentally a money demand crisis caused by a passive tightening of ECB monetary policy. This is due to the insane notion that the yard stick of success price stability, come hell or high water. This is the reason that a crisis is manifesting itself in countries whose fiscal position prior to the recession was not particularly bad.

10 comments

ln(1.7 / 0.9) / (2011 – 1995) = 4.0 % = 1.5% Inflation + 2 % productivity + 0.5% population, like it should be
just bursting the real estate bubble, making housing more affordable, for those who were not born rich

Very interesting piece. Though, like most of your work this is very short, obtuse and difficult to understand. That hides the underlying importance of the chart. As far as I can tell (and I know very little about the subject) the EU’s adherence to keeping the money supply level has created a credit shortage. Is this correct? Please, in the future, provide some clarification and commentary. I think you guys do great work and people want to more easily understand exactly what it is you’re writing about.